Naira, Euro slump against Dollar

Both the Naira and Euro slumped further against the dollar. While the local currency slumped against Dollar, dropping two points to exchange for N370, the Euro dipped by 0.6 per cent against the Dollar.

Against the British Pound Sterling, the Nigerian Currency, exchanged at the rate of N477 at the parallel market and closed at the rate of N433 against the European Single Currency, Euro.

“Our bias in these thin markets is to sell the euro on rallies against the dollar as we think underlying positioning is still quite stretched,” said Adam Cole, chief currency strategist at RBC Capital Markets in London.

Friday’s speech by European Central Bank President Mario Draghi is among the set-piece events at the Jackson Hole symposium, where remarks by his Federal Reserve counterpart Janet Yellen on the same day will be the main focus.

With speculative bullish bets on the euro still near its biggest in five years, according to latest positioning data, some investors think the euro’s strength may likely fade given the central bank’s recent cautious stance about the currency.

Since hitting a 2-1/2 year high near $1.1910 in early August, the common currency has lost some steam, as investors took on board the cautious tone struck by ECB policymakers revealed in the minutes of their July meeting.

Draghi will refrain from delivering a new policy message, two sources familiar with the situation told Reuters last week, tempering any expectations for the ECB to start charting the course out of its quantitative easing (QE) stimulus programme.

“The euro has become slightly vulnerable after the recent rise and unless Draghi comes out and says anything significant, we expect the currency to remain under pressure,” said Piotr Matys, an FX strategist at Rabobank in London.

The euro’s losses were also exacerbated by a broad bounce in the dollar against most of its rivals in mid-morning trades.

It hopped 0.4 percent .DXY higher against a trade-weighted basket of its currencies on Tuesday. The sterling fell to a six-week low against the dollar GBP=D3.

Meanwhile the Central Bank of Nigeria (CBN) on Monday, August 21, offered 195 million dollars in three segments of the Foreign Exchange Market (Forex) to boost liquidity in the operation.

Mr. Isaac Okorafor, CBN’s Acting Director, Corporate Communications, said that in the wholesale segment of the inter-bank Foreign Exchange market, it auctioned 100 million dollars and also intervened in the Small and Medium Enterprises (SMEs) with 50 million dollars.